FEDERAL COURT OF AUSTRALIA

Klewer v Walton [2004] FCAFC 284

BANKRUPTCY – Bankruptcy notice – validity – order for the payment of costs on the dismissal of an information – whether right of immediate execution of the order – whether execution impliedly stayed

Bankruptcy Act 1966 (Cth) ss 40(1)(g) and 41(3)(b)

Fines Act 1996 (NSW) s 109, 110

Local Courts (Civil Claims) Act 1970 (NSW) ss 58 and 70

Local Courts (Civil Claims) Rules 1988 (NSW) Pt 39 r 3

Abigroup Limited v Abignano (1992) 39 FCR 74 - cited

Reasonable Endeavours Pty Ltd v Dennahy (2001) 107 FCR 144 - cited

In the marriage of Cawood (2000) 27 Fam LR 403 - cited

Franks v Warringah Council (2003) 131 FCR 287 - distinguished

Re Pantelich; Ex parte Cekic (1989) 25 FCR 603 – distinguished

Re Williams; Ex parte Alberton Electrical Service Pty Ltd (1982) 43 ALR 552 - distinguished

LUCY KLEWER v IAN WALTON

N696 of 2004

RYAN, MERKEL AND CONTI JJ

5 NOVEMBER 2004

SYDNEY

On appeal from a single Judge of the Federal Court of Australia

THE COURT ORDERS THAT:

1.         The appeal be dismissed.

2.         The appellant pay the respondent’s costs, to be taxed in default of agreement.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

On appeal from a single Judge of the Federal Court of Australia

REASONS FOR JUDGMENT

THE COURT

1                     On 10 December 2001 the Local Court Coffs Harbour dismissed an information by the appellant against the respondent for common assault and ordered the appellant to pay the respondent’s professional costs of $10,504 within 14 days, that is to say, on or before 24 December 2001 (“the costs order”).  The amount ordered to be paid was not paid.

2                     A Bankruptcy Notice, which was issued by the Official Receiver on 12 December 2003, was served on the appellant on 11 February 2004.  The Bankruptcy Notice specifies the total debt owing as $10,504.  Annexed to the Bankruptcy Notice was a Certificate of Conviction under “the Evidence Act, 1995 Section 178” issued by the Local Court Coffs Harbour.  It gives particulars of the dismissal of the information and records the order for Ms Klewer to pay the respondent’s professional costs in the amount of $10,504 on or before 24 December 2001. The Certificate of Conviction, which is dated 21 January 2002, contains a certification under the seal of the Local Court Coffs Harbour by the Clerk of the Court to the effect that the particulars set out in the Certificate are a true record of the Court.

3                     The appellant applied to set aside the Bankruptcy Notice. Before the primary Judge (Tamberlin J) she contended that the respondent was not entitled to enforce the costs order. As a consequence, so it was argued, the requirements of s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) had not been satisfied, and the exception in s 41(3)(b) of the Bankruptcy Act applied, with the result that the respondent was not entitled to have the Bankruptcy Notice issued. The primary Judge found that the order for the payment of costs was able to be enforced and there was a judgment debt in force, execution of which had not been stayed.  Accordingly, his Honour dismissed with costs the appellant’s application to set aside the Bankruptcy Notice.  The appellant has appealed to a Full Court against the orders of the primary Judge.

4                     On the appeal the appellant, who again represented herself, filed written submissions in support of her appeal.  The substantive ground argued by her on the appeal was not a ground she argued before the primary Judge. However, the appellant maintained her contention that the respondent had not been entitled to enforce the costs order when the Bankruptcy Notice was issued. 

5                     In order to deal with the appellant’s contention it is necessary to outline the statutory scheme that provided for the enforcement of the costs order. The order was made pursuant to s 81(1A) of the Justices Act 1902 (NSW) (“the Justices Act”), which provided that when a Justice dismisses an information against a defendant the Justice may order that the prosecutor pay to the defendant such professional costs as the Justice considers to be just and reasonable.  Section 81(2) required the amount so allowed to be specified in the order.  It is clear that the costs order satisfied the requirements of s 81.

6                     Part 6 of the Fines Act 1996 (NSW) (“the Fines Act”)provides for the civil enforcement of orders to pay monetary amounts in proceedings for an offence. In particular, under s 110 of the Fines Act the costs order, which is an “ancillary money order” under s 109, is enforceable as if it were a judgment for the payment of the amount due under the Local Courts (Civil Claims) Act 1970 (NSW) (“the Local Courts (Civil Claims) Act”).  Section 109A provides for the costs order to be governed by Pt 2 Div 2 of the Fines Act, which allows for arrangements to be made for the payment of fines.  However Pt 2 Div 2 also provides, in s 7(3), for a court to direct payment by a particular date. That is what occurred in the present case.  The costs order, which directed payment of the amount due by 24 December 2001, was therefore enforceable under s 110 of the Fines Act as a judgment under the Local Courts (Civil Claims) Act for the payment of that amount by the due date.

7                     Section 58 of the Local Courts (Civil Claims) Act provides:

“(1)     The registrar of a court in which a judgment is given or entered up may, on the application of the judgment creditor, issue a writ of execution in the nature of a writ of fieri facias, which writ of execution shall be directed to the Sheriff and all bailiffs appointed for the purposes of this Act, who, subject to section 9, are hereby empowered to execute the writ in any part of New South Wales in the same manner in all respects, subject to the provisions of this Act, as a process of a similar nature issuing out of the Supreme Court may be executed by the sheriff or a deputy sheriff of that court.

(2)       A writ of execution issued under this section shall be in force for the prescribed period.”

8                     Under the above provisions it is clear that at the date of the Bankruptcy Notice the respondent was a judgment creditor under the costs order that had effect as a judgment of the Local Court and in respect of which a writ of execution was able be issued by the Registrar of the Local Court Coffs Harbour on the application of the respondent pursuant to s 58(1) of the Local Courts (Civil Claims) Act.

9                     However, the appellant contends that before a writ of execution could issue the respondent was required to file a certificate of the order with the Registrar of the Local Court Coffs Harbour. In support of that contention the appellant relied on Pt 39 r 3 of the Local Courts (Civil Claims) Rules 1988 (NSW), which provides:

“Where a conviction or order (not being an order referred to in section 70 of the Act), made under any Act, operates as an order for the payment of money under the Act or may be enforced under the Act, the conviction or order shall not be enforceable unless there has been filed with a registrar a certificate of the conviction or order.”

10                  Part 1 r 3(1) defines a registrar, in relation to any proceedings, as the registrar of the proper court in relation to the proceedings.  Under Pt 1 r 3(1) the proper court in the present context is the Local Court Coffs Harbour.  Section 70 of the Local Courts (Civil Claims) Act provides:

“Any order made under this Act by a court for the payment of an amount of money by one person to another shall, for the purposes of Division 6 of Part 4 and Part 5, be deemed to be a judgment.”

11                  The appellant argued that s 70 is not applicable as the costs order was made under the Justices Act and that Pt 39 r 3 therefore applies to the costs order. She claimed that there is no evidence that a certificate in respect of the costs order was filed with the Registrar of the Local Court Coffs Harbour and that the costs order was therefore not enforceable by reason of Pt 39 r 3 of Local Courts (Civil Claims) Rules.  Consequently, so it was contended, the appellant had not committed an act of bankruptcy, and the Bankruptcy Notice could not issue, because execution in respect of the costs order must be taken to have been impliedly “stayed” pending the filing of the certificate: see ss 40(1)(g) and 41(3)(b) of the Bankruptcy Act and Abigroup Limited v Abignano (1992) 39 FCR 74, Reasonable Endeavours Pty Ltd v Dennahy (2001) 107 FCR 144 (“Reasonable Endeavours”), In the marriage of Cawood (2000) 27 Fam LR 403 (“Cawood”) at 408 [18]-[19] and the cases there cited.  The principle for which those cases were said to stand is that, for the purposes of ss 40(1)(g) and 41(3)(b) of the Bankruptcy Act, execution is taken to have been impliedly stayed, and a Bankruptcy Notice cannot issue, unless the judgment creditor is in a position to issue execution in the sense that the judgment creditor has taken all the steps that entitled him or her to reap the fruits of the judgment.

12                  The respondent submitted that the specific ground upon which the appellant now relies was not raised before the primary Judge and that she should not be permitted to raise it for the first time on appeal. There is some force in that submission. However, as we have concluded that the principle upon which the appellant relies does not assist her in the present case, we have decided that it is preferable to dispose of the appeal on the merits. There are two reasons why the principle does not assist the appellant. 

13                  Firstly, the respondent’s entitlement to issue a writ of execution in respect of the costs order is set out in s 58 of the Local Courts (Civil Claims) Act. As explained earlier, by reason of s 110 of the Fines Act and s 58 of the Local Courts (Civil Claims) Act, as at the date of the issue of the Bankruptcy Notice the respondent was entitled to issue a writ of execution in respect of the costs order as if it were a judgment of the Local Court under the Local Courts (Civil Claims) Act. Thus, the costs order is not relevantly distinguishable from an order under s 70 of the Local Courts (Civil Claims) Act save that it is not an order under the Act, although it is to be enforceable as if it were such an order. Part 39 r 3 of the Local Courts (Civil Claims) Rules applies to “a conviction or order… made under any Act” but is not expressed to apply to a “judgment” of the Local Court. The distinction between an “order” and a “judgment” is made in s 70 and it is likely that Pt 39 r 3 was not intended to apply to judgments of the Local Court. Further, the rules cannot impose a condition for the enforceability of a judgment which is inconsistent with s 110 of the Fines Act and s 58 of the Local Courts (Civil Claims) Act and should not be interpreted as doing so. We have therefore concluded that Pt 39 r 3 does not apply to an order of the Local Court that is deemed to be or is to be treated as a judgment of the Local Court. Accordingly, Pt 39 r 3 does not apply to the costs order.

14                  Secondly, there is no evidence that a “certificate of the order” referred to in Pt 39 r 3 of the Local Courts (Civil Claims) Rules had not been filed with the Registrar of the Local Court Coffs Harbour before the issue of the Bankruptcy Notice. The Certificate of Conviction, which was dated 21 January 2002, was signed by the “Clerk” of the Local Court Coffs Harbour as “the officer having ordinarily the custody of the records, documents, minutes proceedings and showing the conviction, sentences or orders of the Court”.  When the Local Courts Act 1982 (NSW) (“the Local Courts Act”) was amended by the Justices Legislation Repeal and Amendment Act 2001 (NSW) (“the amending Act”) to create, amongst others, the office of Registrar of the Local Court in substitution for the office of Clerk of the Local Court, cl 11 of Schedule 1 of the Local Courts Act (which had effect as a saving and transitional provision) provided that the person who held office as a Clerk of a Local Court is taken to have been appointed as the Registrar of that court. The onus lies on the appellant to establish the factual basis for her claim that execution has been impliedly stayed and she has adduced no evidence that the relevant certificate had not been filed with the Registrar.  No point can fairly be taken about the lack of evidence on the part of the respondent on this factual issue as it was raised for the first time on the appeal. We would add that the two certificates of the Clerk of the Local Court Coffs Harbour, who became the Registrar of that Court under the amending Act, suggest that it is likely that the relevant information was duly recorded and filed in the Local Court before the Bankruptcy Notice was issued.

15                  The present case is therefore distinguishable from the cases, upon which the appellant sought to rely, where leave of a court, or an enforcement order, is required prior to the issue of a writ of execution in respect of a judgment (see, for example, Reasonable Endeavours  and Cawood). It is also distinguishable from cases where the filing of the requisite certificate as to an amount due or the taking of particular administrative steps is imposed as a condition subject to which the order which is sought to be enforced is taken to be a judgment or order of a court in respect of which execution may issue (see, for example, Franks v Warringah Council (2003) 131 FCR 287, Re Pantelich; Ex parte Cekic (1989) 25 FCR 603 at 607-608 and Re Williams; Ex parte Alberton Electrical Service Pty Ltd (1982) 43 ALR 552 at 554-555).

16                  For the above reasons, we have concluded that the appellant has failed to establish that the costs order had been impliedly stayed when the Bankruptcy Notice was issued or that at that date the respondent had not taken all the steps that entitled him to reap the fruits of the costs order.  As the above ground was the only substantive ground raised on the appeal it must follow that the appeal is to be dismissed with costs.

Associate:

Dated:              5 November 2004